Small business accounting software – The Chart of Accounts explained – Part 1 of 4

The essential reports you need to view the financial activity, the financial position and the timings of the amounts of cash coming in and going out of your business are derived from the information and balances recorded in your chart of accounts.

Businesses that thrive and grow know what they have to track and measure and why. The detail of what they want to track and measure is reflected in the design of their Chart of Accounts which in turn is a mirror of what is in their Business Plan.

Well managed businesses use business planning to forecast what they expect to happen in the future and ensure organisational alignment with golas. They always begin this exercise with the end in mind

Good businesses set less than five clear objectives and then think through and decide the best strategies to achieve them.

Strategies are then translated into Activities with dates and priorities which are then relayed and assigned to the individuals or groups for execution.

The plan details the assumptions of what sales are forecasted to happen when, what the future financial picture is expected to be.

Each assumption helps you define financial targets each of which has financial implications for a business. So it’s essential you are able to accurately track and measure these critical numbers

Cash provides the oxygen for every business and therefore it’s critical the supply and consumption is carefully managed to keep the business alive and help it grow and flourish.

Planning is pointless with measurement. Tracking and measuring relies entirely upon supporting information behind the critical numbers being accurately recorded and well organised.

This can only be achieved with enduring discipline, a well organised chart of accounts and good small business management software.

Because of the rapid emergence of SaaS systems, online small business accounting software now makes it possible for business owners to see real time view of progress of their business against their plan.

Every number in the accounts of a business has a story behind it containing events and characters the details of which cannot easily be recorded in an accounting system therefore Small business management software as opposed to accounting software is now an essential part of the foundations of a well run business.

Continued in - Small business management software – The join between planning and accounting – Part 2 of 4